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Pace University graduate students Charles Yan, Ron Veith, and Adriana Kalova open the NASDAQ

With a "hold" recommendation on Galaxy Nutritional Foods (AMEX: GXY), Pace University Graduate Student Team Wins NYSSA's First Annual "Investment Research Challenge"

Winners to open NASDAQ Stock Market on April 28

New York, NY, April 22, 2003 - Pace University graduate students Priya Hariani, Adriana Kalova, Ron Veith and Charles Yan took first place in The New York Society of Security Analysts (NYSSA) first annual "Investment Research Challenge." Pace out-maneuvered student teams from Fordham University, New York University, Seton Hall University, and St. John's University in this eight-month educational initiative designed to teach business and finance students best practices in securities research report writing and presentation and provide valuable hands-on experience in analysis.

Taking the roles of securities analysts, the Pace University team researched Galaxy Nutritional Foods (AMEX: GXY), a manufacturer of healthy, natural and organic foods. After extensive financial and market research—and tastes of the products—the team delivered a "hold" recommendation. Their bottom line conclusion: "We are placing a HOLD recommendation on Galaxy Nutritional Foods (Galaxy) with a 12-month price target of $1.84. Under new management, the Company has returned to operating profitability but still needs to complete its financial restructuring."

The Pace students' report won after presentations to a high profile panel of Wall Street experts on April 10 at Bloomberg Headquarters. The panel of judges was chaired by Martin S. Fridson, CFA, of FridsonVision LLC and included Anne Briglia, CFA, of Prudential Securities; Stephen E. Canter of The Dreyfus Corporation; Steven E. Kent, CFA, of Goldman Sachs; and Byron R. Wien of Morgan Stanley.

The NYSSA Investment Research Challenge is sponsored by The NASDAQ Stock Market. The winning Pace team opened the NASDAQ on Monday, April 28, in Times Square.

NYSSA's first annual Investment Research Challenge began in Fall 2002, with NYSSA-sponsored seminars in research, report writing, and ethics. The student teams then researched Galaxy Nutritional Foods, a public company selected by NYSSA, and held a question and answer session with top management during the winter term. These efforts became the basis for each team's written report. Volunteer professional research analysts mentored the teams and reviewed and critiqued the reports.

"I think that our decision to do some 'legwork' and actually check out Galaxy's product made a big difference," said student team member Ron Veith. "We did what we could to add a practical dimension to our work that gave others the impression that we were researching a company, not a collection of numbers."

Priya Hariani, another student team member, concurred, adding: "It's really important to do your own research. You have to try the company's products, do additional research on the industry, and not believe every word management says." The students' practical approach to this Challenge speaks to Pace's success in teaching students how to apply theory to practice, an approach for which the Lubin School of Business is widely recognized.

"An important element in their winning was their ability to take a mass of information about the company and put it all into an analytical and integrated framework that supported their hypothesis," said P.V. Viswanath, associate professor of finance and economics at Pace University's Lubin School of Business and advisor for the Pace team. "We are delighted that the hard work and creativity of our students has been acknowledged with their winning this prestigious competition." Pace alumnus James Morris of Utendahl Securities also served as an advisor to the team.

In addition to opening the market, each member of the Pace team received a one-year student membership to NYSSA and the opportunity to attend one event, conference, or class sponsored by NYSSA, free of charge.

The New York Society of Security Analysts (NYSSA) is a not-for-profit organization committed to the education, inspiration, and advancement of investment professionals. NYSSA has 8,500 members and is the largest of the 115 analyst societies worldwide that comprise the 58,000-member Association for Investment Management and Research® (AIMR®). NYSSA provides a premier independent forum for the exchange of information among investment professionals and the investing public; maintains a continuing education program; and encourages high standards of ethics, integrity, and professionalism. NYSSA's programs include investment seminars, industry forums, corporate presentations, CFA® preparation, and continuing education classes in finance and investments. Established in 1937, NYSSA has been educating and informing investment decision-makers for more than 65 years.

"This is certainly a challenging time for our profession," opined John J. O'Connor, vice chairman, Services, for PricewaterhouseCoopers, the largest of the Big Four accounting firms, who was an Executive in Residence on Monday, March 31, 2003. In his remarks, O'Connor addressed the recent corporate failures that have created uncertainty in the investment markets and drastically changed the dynamics of the accounting profession. "Capital markets function based on the reliability of financial information and ... when the reliability of that information comes into question, the capital markets go into disorder."

O'Connor, who holds responsibility for the firm's Assurance and Business Advisory Services (ABAS), Tax, Financial Advisory Services practices and Marketing, Communications and Industry programs in the United States, spent the day at the Lubin School of Business on the New York City campus interacting with students and faculty. His day started with a formal luncheon with a small group of faculty, students, and staff, during which he discussed the very critical issue for the accounting profession—rebuilding public trust.

According to O'Connor, the loss of trust is the number one reason that keeps investors from going back into the market: "As a profession we have to step up and demonstrate that our audits are effective, that they do provide the public with reliable financial information, and that they help create efficient capital markets. What we need to do today is to figure out the way of rebuilding that confidence," he explained to the luncheon audience.

During the afternoon lecture to undergraduate students, O'Connor said that a change in the top leadership is the first step to establishing integrity and trust in the industry. "We need to have better leadership.... The tone at the top is critical. Integrity and personal responsibility are the two primary qualities required of business leaders today," he continued. Speaking about the controversy going on in the analysts' community in terms of questions about their objectivity, O'Connor commented: "Analysts must understand the business model of a company.... We are likely to see analysts separated from the investment banks, [which will] create more objectivity."

"PwC University" Changing Company Culture
According to O'Connor, PwC was the first public accounting company to acknowledge it could do better in preventing the scandals and that it was ready to close the gap between the public's expectations and the accounting information available to it. He explained that closing the expectations gap really means that PwC intends to go beyond professional standards to do a better job in detecting fraud, predicting the sustainability of the business model, establishing and maintaining effective internal controls, and conducting high-quality audits.

When asked by MBA students, who crowded the lecture hall for the evening session, what in-house improvements were being undertaken at PwC, O'Connor described the experiential learning program "PwC University" targeted at changing the culture within the company. Launched a year ago and including partners from all over the country, the program involves discussions of critical issues, exercises, and debriefing of the values in question such as teamwork, courage, leadership, etc. Judo exercises, for instance, help partners stay focused on the problem, conversations with professional actors exercise concepts of courage and ethics needed when dealing with clients, and getting together to change tires on a race car show the importance of teamwork.

"I would argue that being transparent [in reporting], being accountable, taking personal responsibility, having integrity are the most important things in regaining trust," O'Connor said in talking of other solutions suggested by the work being done at PwC.

Speaking about benefits for the future, O'Connor concluded: "We have to make a set of global accounting standards, global audit standards, and some type of global structure about capital markets because they are very different in different countries."

O'Connor holds a B.S. in Accounting from Suffolk University and is a member of the Massachusetts Society of CPAs and the American Institute of CPAs. He also serves on the Board of Trustees of Suffolk University and the Dana-Farber Cancer Institute.

"A kiss is just a kiss,/ A sigh is just a sigh,/ The fundamental things apply,/ As time goes by," sang a character from the 1943 movie classic, Casablanca, the abstract of which David Oreck used to open his lecture to Lubin undergraduate students on the Pleasantville campus on Tuesday, April 22, 2003.

The founder and chairman of the Board of Oreck Corporation, a major manufacturer of premium cleaning equipment and the famed vacuum cleaner, 79-year-old Oreck visited Pace's Westchester campuses as an Entrepreneur in Residence and shared with the fascinated audience of business students and faculty his ideas on how to build a premium brand. "To build a brand...pay attention to the fundamentals... you have to offer a customer a reason to buy," explained Oreck.

Oreck spoke with invited faculty and students at a luncheon and then met with undergraduate classes in the afternoon. In the evening, he spoke to graduate classes on the White Plains campus.

The Age of Marketers"Premium brands, the brands we respect, are built by good marketers," said Oreck, as he held up his left hand with a multifunction Nike watch on it, "price—$49." All of a sudden the speaker showed his right hand with a $5,000 Rolex on it and said: "It doesn't tell the time as good ... it doesn't keep the date correctly, it has no back lighting, [however] they sell a lot of these things. I call it good marketing." Oreck underlined the value and complexity of building a premium brand today when product differences are slight: "Part of this good marketing is the exclusivity of the Rolex brand. You won't find a Rolex at Wal-Mart. Remember, you are judged by the company you keep."

The Marketing Behind Oreck Vacuums"One of the fundamentals in building a brand is learning how to listen," commented Oreck, who, when he introduced his 8-pound vacuum, said he was told by the experts to make it heavier, not because it was too light to be efficient, but because they said, "customers felt heaviness equates with cleanness." The ingenious entrepreneur decided to sell his vacuum to places with reputations for being clean such as luxury hotels, and he succeeded.

"If your best idea for marketing is running sales and cutting prices you will lose premium brand status," commented Oreck on such a poor substitute for good marketing as the every day sale. "To build a brand you have to know how to sell ... I have a rule in my place that when anyone comes with an idea, I want three positive answers [about it]," he said in speaking about the importance of recognizing good selling ideas.

Oreck told the students he felt that word of mouth is the most powerful way to get a good or bad name in marketing products. His recommendation on advertising was: "Be clear! People tend to make so many things complicated ... that when they are confronted with something simple they remember it."

Essential Elements for a Good Company"I believe there are two essential elements for a successful company: one is to have a marketing visionary, and the other is to have a business manager. If an organization believes these two roles are incompatible, this organization will soon find itself out of business," said the devoted leader of 1,500 employees.

"The last thing I want to tell you about building a brand is about having an incredible work ethic." With these words Oreck showed the audience a documentary film about an astonishing salesman, Bill Porter. Ignoring his cerebral palsy, Porter walked door to door for many years selling products. "When you are to be successful, you want to be like Bill Porter. Don't give up, don't take no for an answer. There are no shortcuts to tomorrow. Have the courage of your convictions, focus, find a niche, work hard, do the best you can," concluded Oreck, the entrepreneur par excellence.

After days of rain and stormy weather, the sky cleared and spirits soared on Tuesday, May 27, 2003, as Lubin alumni, faculty, administrators, and corporate friends gathered again at the Wheatley Hills Golf Club, East Williston, New York, for the Lubin 5th Annual Golf Classic. A tradition within the School, the Annual Golf Outing provides the opportunity for participants to network and benefit the School while enjoying a great day at one of the nicest golf courses on Long Island.

This year's Golf Classic proved to be a success once again, both in terms of the number of participants and the amount of support raised for the Lubin Leaders and Scholars program. Again this year DELL Computer Corporation was the event's title sponsor. Almost $103,000 was raised compared with $87,000 last year.

Scott Friedman, Marc Wiener, Rich Friedman, and Jeff Cole were this year's winners of the annual Robert I. Ruback Memorial Award with a low score of 70.Named in honor of Robert Ruback, the founder and chair of the Lubin School's Department of Taxation for more than 30 years, the award is given to the team with the lowest net score overall.

The team of Jeanette Albanese, Connie Pustorino, Mary Bagnato, and Patricia Racanello earned the award as the lowest grossing ladies team, while the team of John Rappaport, Mike Patti, Nick Patti, Sr., and Nick Patti, Jr. were honored for their golfing skills as the men's lowest grossing team.

In the individual contests, the "longest drive" of the day was awarded to Pat Racanello and Larry Durkin. The "straightest drive" was awarded to Mary Bagnato and Jim Lacchini. Rich Reeder was the "Closest to the Pin" contest winner, and Paul Daily won the "Guess Your Own Drive" contest.

Nick Patti, Sr. beat out other competitors and came close to winning the $10,000 grand prize in the putting contest, but missed on the 50-foot putt. However, in the "scratch game" he was the lucky winner of the "3 Nights Golf" vacation. There were a number of raffle winners, as well, who won such outstanding prizes as airline tickets to London, a Tiffany sports watch, a diamond heart pendant, and a Fuji digital camera. This year again the participants attempted a hole-in-one to win a lease on a brand new Mercedes Benz and a trip to Scotland, but perhaps they'll have better luck next year.

"Focus on what [kind of] firm you are going into—the culture of that firm, its strategy—and not so much on what your starting position is,"suggested Ana M. Barrio, BBA '80, senior vice president of JPMorganChase, in speaking of the gloomy job market graduates are facing, at the first annual Lubin Industry Conference. The conference was held on April 24, 2003, in the Michael Schimmel Center for the Arts at the downtown New York City campus and drew a diverse audience of business professionals, faculty, and a large contingent of students, including many international students.

This student initiative came about as students sought answers to some of their own questions about life after graduation and how to find meaningful work in a declining economy. Thuyha Pham, student president of the Lubin School, spearheaded the efforts of several student organizations, including Beta Alpha Psi, the Student Government Association, Pace University Marketing Association (PUMA), and the National Association of Black Accountants (NABA), to name a few.

The conference was kicked off with a panel discussion, which included five luminaries from the fields of finance, e-retailing, publishing, banking, and accounting: Ana M. Barrio; Brian Buckley, MBA, '80, vice president, professional sales and merchandising, BarnesandNoble.com; Patricia Haegele, senior vice president and publisher, Good Housekeeping Magazine; William E. Kirk, senior vice president, Bank of New York, and Michael R. Monteleone, BBA, '79, partner, KPMG. Moderated by Professor Paul Kurnit, Marketing adjuct, the panel discussion provided an insider's perspective on the various industries represented, the panelists' personal career paths, and the working environment at the companies represented.

The conference continued in the afternoon with a number of workshops that were conducted by industry leaders that focused on developing specific career paths within a number of industries.

"There is much work to be done in the world and much of it by economists," said Harvard economist Dr. Benjamin Friedman, the William Joseph Maier Professor of Political Economy, in beginning his lecture on the "Moral Consequences of Economic Growth." Friedman was at Pace University on April 3, 2003, for the 3rd Annual Henry George Symposium organized by Henry George Professor of International Management Robert Isaak, with the assistance of Friedman's friend and colleague, Dr. Michael Szenberg, chair of Lubin's Finance and Economics Department. With the generous support of the Robert Schalkenbach Foundation, the symposium was held at the Pace downtown New York campus, before an audience of faculty, students, and guests.

In suggesting a hypothesis to explain why the economics profession and the business community should pay close attention to economic growth, Friedman opined: "If we lived in a poorer society, the answer would be quite obvious—at low levels of income, increases in per capita income translate quite directly into longer life expectancy, reduced infant mortality, more widespread literacy, reduced morbidity.... I want to suggest a radically different argument for why we care and, indeed, why we should care so much about economic growth."

Moral and Income High Ground Connections
"A world of economic growth... is likely to be a world in which the intensity with which people care about living better than one another...is sharply diminished compared to what it would be in a world in which incomes stagnate," said Friedman by way of explaining his hypothesis that establishes the connection between such positive moral characteristics of society as openness of opportunity, democracy, tolerance, mobility, fairness across groups and individuals, and increases in per capita income. "Economic growth ... increases the society's proclivity to realize these positive characteristics, and, by contrast, stagnation ... undermines the society's ability to realize them," he suggested.

Late 19th Century ParadigmTo prove his hypothesis that increases in per capita income might have positive effects on social relations in the society and policy, Friedman presented a fascinating analysis of the 30-year period after the Civil War in the United States, from 1865—1895, as a paradigm for his arguments. During the first half of this period, he pointed to a time of rapid economic growth resulting from industrialization and the invention of new technology, when positive changes occurred in the society: large amounts of money were spent on education, poverty relief programs at the state level, and the first antipoverty program at the federal level; the society held a very tolerant attitude towards immigrants; and the enactment of a civil rights act prohibiting racial segregation in public facilities. "This period of extraordinary economic growth following the Civil War was also one in which the society moved toward greater mobility, fairness, tolerance, strengthening of democratic institutions, etc.," commented Friedman.

"Unfortunately the economic growth did not last. By the 1880s things were on the downward slide ... and all this culminated in 1893 with the depression," continued Friedman. He pointed to the works of economists, historians, and writers of fiction of the period that reflected the remarkable pessimism that settled over the American society at the time. "In terms of attitudes towards immigrants ...the anti-ethnic, anti-foreigner, anti-urban agitation at the time was quite extraordinary at the legislative level," said Friedman.

Implications for the Present"The optimistic implication of all this is that the countries in the developing world today that are in fact developing [China, Korea]... do not have to wait until they reach a Western level of income per capita in order to experience a fairly dramatic level of liberalization compared to what they had known in the past. The second implication, however, is a warning," explained Friedman. "If it's true that it's the growth rate that matters ... not just the level of income, then, even in a society as rich as ours, we have to be aware that the stagnation of economic growth puts the society's fundamental values at risk," he continued.

As for the policy implication, Friedman suggested: "Economic growth bears a very important positive externality... the market left to its own devices will under-provide economic growth and, therefore, there is a need for positive public policy in order to create more economic growth than the market will otherwise provide."

In conclusion, Friedman referred to many of the negative developments on the political and social front today in relation to the late 19th century period discussed to describe "‘predictable pathologies' that emerge when the society experiences economic stagnation. We need to recognize in our public conversation that economic growth has very important moral consequences attached to it."

Friedman, who holds A.B., A.M., and Ph.D. degrees in Economics from Harvard University, also received an M.Sc. degree in Economics and Politics from King's College, Cambridge, UK. He serves as a director of the Private Export Funding Corporation, is a director of Britannica.com, a trustee of the Standish Mellon Investment Trust, and an advisor to the Federal Reserve Bank of New York.

On April 27, 2003, Dr. Matthew R. Morey, associate professor of Finance, received a highly prestigious 2003 Investment Management Consultants Association (IMCA) Journalism Award for his article, "Rating the Raters: An Investigation of the Mutual Fund Rating Services," published in the December 2002 issue of IMCA Journal of Investment Consulting. Presented to Morey during the IMCA Spring Conference in Scottsdale, Arizona, the annual award is given to acknowledge the best writing in the investment industry for the previous year. Morey's research on Morningstar and Value Line rating systems' prediction abilities has received a good deal of attention because of his findings: that they don't do such a good job of predicting future winning funds.